Pacific Ready-Cut Homes., Inc. v. Law

SHENK, J.

The plaintiff, Pacific Ready-Cut Homes, Inc., brought two actions against the defendants Peter Peterson, Nora Peterson, and L. L. Law to foreclose mechanics’ liens. The defendants Peterson answered and also filed a cross-complaint wherein they sought to recover from the plaintiff and its bondsman, Standard Accident Insurance Company, certain damages alleged to have been sustained by them by reason of the failure of the plaintiff to complete the construction of certain improvements on land owned by the Petersons which consists of two residence lots in the city of Los Angeles. The actions were tried together. Judgment was entered in each case in favor of the Petersons on their cross-complaint and against both cross-defendants, viz., the Pacific Ready-Cut Homes, Inc., and Standard Accident Insurance Company, in the sum of $1,675 and costs. The

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plaintiff was denied the foreclosure of its alleged liens and that company is the appellant in each case. The Standard Accident Insurance Company is not appealing. The record in both eases is the same except as to the description of the lots, and the facts, which are not in dispute, are substantially as follows:

On or about the thirtieth day of January, 1924, the Petersons, as owners, entered into a contract with one L. Law, a building contractor, whereby the latter agreed to construct on each of the described lots, in accordance with certain plans and specifications, a double bungalow and garage for the contract price of $4,704. The total contract price was, therefore, $9,408. Under the contract Law agreed to accept as payment of the contract price two promissory notes in the sum of $3,750 each, secured by first mortgages on said lots, and two promissory notes in the sum of $954 each, secured by trust deeds on said lots, which trust deeds should be subordinate to the mortgages. The notes, mortgages, and trust deeds were executed by the Petersons and delivered to Law before any work was done or materials were furnished in the construction of said improvements. On February 11th, Law, while still holding the four promissory notes and said mortgages and trust deeds, proceeded to enter into two contracts, in writing, with the Pacific Ready-Cut Homes, Inc., whereby the latter would agree to construct the bungalows and garages on said lots in accordance with said plans and specifications for the stipulated price of $2,828 for each of the houses and $299 for each of the garages. The Petersons were requested by Law to consent to this arrangement but they refused to do so unless the Pacific Ready-Cut Homes, Inc., would provide security that it would construct said improvements in accordance with said plans and specifications. This the corporation agreed to do. Thereafter the Pacific Ready-Cut Homes, Inc., and Law entered into said contracts whereby the corporation agreed to and did accept from Law as full paymnt of its contract price the latter’s promissory note due in ninety days and secured by the assignment to the corporation of the notes, mortgages, and trust deeds held by Law against the Petersons. On March 13, 1924, the Pacific Ready-Cut Homes, Inc., as principal, and Standard Accident Insurance Company, as surety, executed a bond binding themselves to